Origin defends response to ASX price query

MERGER target Origin Energy, whose share price rose sharply last month, has responded to a December 20 query from the Australian Stock Exchange following an unsolicited approach from fellow gas and electricity retailer AGL Energy.
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The ASX had queried Origin over a letter it sent to the bourse last month, which claimed the company was not aware why its share price rose in December.

In a letter to the ASX this morning responding to the December 20 price query, Origin said it did not view the AGL proposal for a possible $11 billion merger “material” because information relating to it was confidential.

It also said no discussions had been entered into at that time.

“The speculation that had appeared in the press prior to that time was the subject of the query related to a takeover proposal of which the company was not aware, including in the context of the definition of the term ‘aware’ for the purposes of the ASX listing rules,” Origin said.

But after a report in the Australian Financial Review on January 4 that said Origin was in merger negotiations with AGL, and following consultation with its legal advisers, Origin decided an announcement should be made to the market.

“This decision, and the company’s legal advice, was influenced firstly by the fact that the report in the Australian Financial Review indicated that the proposal may have ceased to be confidential and that the exception contained in Listing Rule 3.1A may no longer be applicable,” Origin said.

“And secondly by the fact that the report was misleading insofar as it suggested that the relevant parties were engaged in discussions in relation to the proposal, which was not the case and therefore could have itself created a false market if not corrected.”

The recently restructured AGL Energy has a market capitalisation of about $6 billion, while Origin is not far behind at about $5.6 billion.

If AGL decides to proceed with a merger proposal, it will be the third time in nine months that it has made moves on an ASX-listed energy company.

In March, AGL retaliated against a takeover bid by Western Australian utility Alinta by unveiling its own merger proposal.

After being locked in a stalemate for several weeks, the downstream energy players eventually agreed to merge their assets in a $6.5 billion deal.

Then last month, AGL appeared to outflank Santos by securing a 27.5% stake in coal seam methane producer Queensland Gas Company for up to $292 million, subject to shareholder approval.

In a short time, AGL has made itself a major player in CSM, taking 50% in the Moranbah and Camden projects and now a major slice of QGC.